We had a heavy event calendar last week for markets, with the Fed, BOJ and BOE meetings. And then we had the anticipation of the G-20 Finance Minister’s meeting as we headed into the weekend.

As I said to open the week last week, markets were pricing in a world without disruptions. But disruptions looked likely. Still, the week came and went and stocks were little changed on the week, but yields came in lower (despite the Fed’s third rate hike) and the dollar came in lower (again, despite the Fed’s third rate hike).

Is that a signal?

Maybe. But as we discussed on Friday, the divergence between market rates and the rate the Fed sets is part central bank-driven Treasury buying (from those still entrenched in QE — Japan, Europe), and part market speculation that higher rates are threatening to the economy, and therefore traders sell short term Treasuries (rates go higher) and buy longer term Treasuries (rates go lower). With that, the Fed has been ratcheting the Fed Funds rate higher, now three times, but the 10 year government bond yield is doing nothing.

As for the dollar, if your currency has been weak, no one wanted to head into a G-20 Finance Ministers meeting and sit across the table from the new Treasury Secretary under the Trump administration (Mnuchin) and be drawn into the fray of currency manipulation claims. With that, the dollar weakened across the board last week.

All told, we had little disruption last week, but things continue to look vulnerable this week. Today we have the FBI Director testifying before Congress and acknowledging an open investigation of Trump associates contacts with Russia during the election. Fed officials have already been out in full force today make a confusing Fed picture even more confusing. And it sounds like the UK will officially notify the EU on March 29 that they will exit.

With all of the above in mind, and given the growth policies from the Trump administration still have little visibility on “when” they might get things done, the picture for markets has become muddied.

This all makes stocks vulnerable to a correction, though dips should be met with a lot of buying interest. Perhaps the clearest trade in this picture that’s become more confusing to read, is gold.

Gold jumped on the Fed rate hike last week, and Yellen’s more hawkish tone on inflation. If she’s right, gold goes higher. If she’s wrong, and the Fed has made a big mistake by hiking three times in a world that still can’t sustain much growth or inflation, gold probably goes higher on the Fed’s self-inflicted wounds to the economy.

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